We typically think of labor as a variable cost, even in the very short run. However, some labor costs may be fixed. Which of the following items represents an example of a fixed labor cost?

A) An hourly employee
B) A temporary worker who is paid by the hour
C) A salaried manager who has a three-year employment contract
D) none of the above

Fixed Labor Cost

Expenses that do not change with the level of production or sales, such as salaries that must be paid regardless of the company's level of output.

Salaried Manager

A manager who is paid a fixed annual amount rather than an hourly wage, often receiving benefits such as healthcare.

Employment Contract

An employment contract is a legally binding agreement between an employer and an employee that outlines the terms of employment.